Innovative programs help sell rice

Compete or retreat? In the face of seemingly unbeatable foreign competition, should a U.S. ag product toss in the towel or dig in its heels and search for smarter ways to win sales?

That's the dilemma the U.S. Rice Producers Association faced several years ago, when it was being roundly trounced in its attempts to sell milled rice to Mexico and other countries.

“Rice from Thailand was so much cheaper that we were against a brick wall,” says Jim Willis, director of international programs for the association. “There just wasn't any way we could undersell them on price.”

But, he told members of the Mississippi Agricultural Economics Association at their annual meeting at Mississippi State University, U.S. rice growers had to find ways to increase exports if they were to find a home for the larger production from newer, higher-yielding varieties.

Although consumption of rice in the United States has tripled in recent years — now 25 pounds per capita — producers need to sell at least 50 percent of what they grow internationally. “If we can't do this, we don't have a healthy industry,” Willis says.

“World trade in rice is very volatile and very competitive, and we had to find ways to stay alive. To sell in this arena, you have to be agile, mobile, and hostile. We looked for new, ingenious, innovative ways to compete.”

Since U.S. long grain rice couldn't compete with Thai rice on price, he says, “It became evident in the early 1990s that we were going to have to ship rice in a different form.”

After intense analysis, aided by funding from the Foreign Agriculture Service (“Some much-appreciated help from Sen. Thad Cochran, R-Miss., got this done”), it was decided to retreat on one front while aggressively advancing on another.

“We began moving from sales of milled rice to sales of rough rice,” Willis says. And Mexico, with its high income elasticity, lower per capita rice consumption, and rapidly increasing population, offered great potential for market creation.

“Rather than continuing to try and fight the Thais in milled rice sales, we formed alliances with Mexican millers, who imported our U.S. rough rice and processed it for sales within the country.” An intensive program was launched by U.S. Rice Producers Association to increase consumer awareness of American-grown rice.

An agreement was reached with the Mexican Rice Council to help with the programs. “This was a major achievement,” Willis says, and helped foster cooperation by a host of other private and public organizations. The effort was further aided with the 1993 passage of the North American Free Trade Agreement, which he says created a more favorable tariff situation.

“For years, rice promotion programs in Mexico lacked impact. We knew we had to change a mindset. Our programs targeted 85 percent of the population, through advertising campaigns, direct contact with consumers through cooking demonstrations and taste tests, and other programs to take the benefits of our product directly to the people.” One promotion, Big Rice Pot Day, massed dozens of chefs to cook rice for more than 15,000 people who came to the event.

The efforts, says Willis, “have been phenomenally successful. Today, of the more than 100 countries we ship to, Mexico is the largest single buyer of U.S. rice. It is a great market!”

From 1990-91 sales of less than 200,000 metric tons, purchases of U.S. rice had reached 200,000 metric tons by 2002-03.

So widely known was the program's success, he says, that U.S. Rice Producers Association was approached by Central American countries to launch a similar effort.

An inter-country agreement on cooperation and financing was reached — “a very significant accomplishment,” Willis says, and a major promotion program, Mas por menos (“Give me more rice”), was launched in the region.

“In two years, he says, per capita income of U.S. rice has increased by 1.5 pounds, and Central American rice imports have gone from less than 100,000 metric tons annually to 700,000 metric tons in 2002-03. “Another phenomenal success for U.S. rice,” he says, which has even greater potential as the programs are expanded into other Central American countries.

Things were rolling along well, Willis says, and then a new trade pact, the Central American Free Trade Agreement (CAFTA) “threatened to disrupt the excellent progress we were making,” Willis says. Mexican and Central American millers had made big investments in facilities to import U.S. rice, and CAFTA programs “could undermine the programs and relationships we'd built, and risk reopening those markets to Asian rice.”

Efforts by negotiators on both sides “were valiant,” Willis says, “and we feel things turned out pretty well.” Although CAFTA still isn't signed, “My feeling is that, the way it's structured, it won't harm our markets.”

The aggressive, innovative programs of U.S. Rice Producers Association in Mexico, Central America, and elsewhere “have been the salvation of our industry,” Willis says. “We've created a different market, and it has paid off.”

Down the road, he says, “We'd love to get into Iraq with U.S. rice.” The country, before the U.S. embargo, was one of the top purchasers of American rice, and is still the second largest rice market in the world. “But they've had many years to adapt to Asian rice, and we can't compete with the Thais on price. We hope to send a team there to try and get into that market, but it will be a major challenge.”

Cuba is an even more appealing market, Willis says. Before the embargo 40 years ago, the country was a top market for U.S. rice. Although some sales have been made to Cuba under emergency programs, he says, “Until political positions change in Washington and Florida, I don't see much prospect for any significant progress there.

“But we don't consider any markets off limits, and we'll continue our stance of aggressively seeking ways to sell more U.S. rice.”